The Daves Law Firm represents developers in the formation of condominium regimes in Austin, Texas.
Condominium developers need effective legal counsel from the start of the project and through sales, construction, financing, closings, association formation, management and operations. Many legal documents must be prepared over the course of a condominium project, including the initial declaration, bylaws, rules, certificates of formation, architectural guidelines, surveyor’s and architect’s certificates, consents of mortgagees, and boundary designations.
In addition to traditional condominium formation, The Daves Law Firm is experienced in the formation of site condominiums. Site condominiums are popular in Austin, Texas due to the regulatory challenges associated with subdividing lots within city limits. Site condominiums (also known as ‘detached’ condominiums) are condominium units that are separate and not connected or shared with another unit. The units do not share walls or ceilings/floors. In effect, a site condominium closely resembles land that is subdivided through the traditional subdivision platting process. Site condominiums can be residential, commercial, or mixed use.
A condominium developer will need to create a Declaration of Covenants, Conditions, and Restrictions during the development stage of a community. The CC&Rs will dictate the restrictions and guidelines homeowners must follow after purchasing property in the community. The CC&Rs will detail the creation and maintenance of the association, the association’s covenant for assessments, and guidelines for creating an architectural control committee tasked with ensuring that homeowners adhere to the CC&Rs concerning exterior modifications to properties in the communities.
Well-drafted Declarations are critical to protecting condominium developers. Insightful provisions concerning the passage of control to the owners in the Declaration may prevent many of the pitfalls and controversies surrounding the process. Dissatisfaction over the manner in which the passage of control is accomplished is the subject of much litigation. Mapping out an exit strategy in the Declaration is a valuable step in creating a smooth succession from the developer to the Association.
If the Property being converted into a condominium regime is subject to a mortgage, the developer’s lender mortgagee will be required to consent to the Condominium Declaration, which consent must be recorded. This does not mean that the lender will not be allowed to foreclose its lien on the entirety of the property that secures the lender's debt; however, the lender will take the property subject to the rights created in the condominium documents.
The initial board of directors of the condominium association will need to adopt bylaws. The Bylaws are the Association's housekeeping rules and govern the inner workings and affairs of the corporation. It defines membership and what policies are embraced and rights included in the concept. They should determine the election and activities of directors, administration of the organization, and standards applicable to governance actions. The term ‘Bylaws’ has a popular meaning to include the entire set of governing documents; but this is inaccurate as Bylaws should not contain provisions which are not consistent with statutory definitions, and/or that should be found in the Declaration.
The initial board of directors of the condominium association should adopt “rules & regulations” at its organizational meeting. These rules regulate the use, maintenance, repair, replacement, modification, and appearance of the condominium. More than any other governing document, the Rules provide a framework for the routine regulation of activities taking place in the subdivision. Rules and Regulations should never be used to impose provisions which properly belong in other governing documents and require a vote of the membership.
This document is required by §82.116 of Texas Uniform Condominium Act. The developer must complete a management certificate and file it in the county real property records before the closing of sales of units in the Project.
A condominium association is a legal entity which must be formed through the Texas Secretary of State.
Creating a condominium regime in Texas requires preparing many other important legal documents. If need an attorney to assist with condominium formation in Austin, Texas, please contact the Daves Law Firm and speak with one of our attorneys today.
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